High fuel prices act as speed breaker on auto sales growth

New Delhi: Festive celebrations eluded the auto industry in October with major companies such as Maruti Suzuki, Hyundai, Mahindra and Toyota Thursday reporting low single-digit sales growth for the month owing to weak market sentiment due to high fuel prices and interest rates.

Honda Cars saw flat sales during the month while Tata Motors and Ford India managed to post healthy sales growth during the month.

The country's largest carmaker Maruti Suzuki India (MSI) said its domestic sales stood at 1,38,100 units last month, up 1.5 per cent from 1,36,000 units in September last year. The company witnessed growth in the mini and compact segments which includes models like Alto, Swift and Baleno but saw a dip in sales utility vehicles during the month.

Sales of mini cars comprising Alto and WagonR were at 32,835 units as compared to 32,490 units in July last year, up 1.1 per cent.

Similarly, sales of compact segment, including models such as Swift, Celerio, Ignis, Baleno and Dzire, were up 3.7 per cent at 64,789 units as against 62,480 units in September last year.

However, utility vehicles, including Vitara Brezza, S-Cross and Ertiga were down 11.2 per cent at 20,764 units as compared to 23,382 units in the year-ago month.

Rival Hyundai posted its highest ever sales in a month at 52,001 units in the domestic market last month, up 4.9 per cent from 49,588 units in October last year, led by strong demand for all new Santro and other models like Creta, Elite i20 and Grand i10.

Homegrown utility vehicles major Mahindra & Mahindra (M&M) reported 3 per cent increase in sale of passenger vehicles at 24,066 units as compared with 23,453 units in the same month last year.

"For past few months, the automotive industry has been witnessing subdued retail sales for passenger vehicles segment, because of low consumer buying sentiment. Therefore, one has to remain cautious on how the festive season ultimately turns out to be," M&M President Automotive Sector Rajan Wadhera said.

Similarly, Toyota Kirloskar Motor (TKM) reported a 2 per cent increase in domestic sales at 12,606 units in October as compared with 12,403 units in the same month last year.

TKM Deputy Managing Director N Raja said that they have been "able to sustain good customer demand despite the dampening effect on consumer sentiment owing to hike in fuel prices, higher interest rates, increase in insurance premium".

Honda Cars India's sales remained flat during the month at 14,233 units as compared with 14,234 units last October.

"Despite the festival season, the consumer sentiment has remained subdued last month in comparison to other years. However, Amaze continued its strong performance and the recently launched CR-V created fresh excitement in its segment with its premium offering," Honda Cars India Ltd Senior Vice President and Director, Sales and Marketing Rajesh Goel said.

Tata Motors on the other hand reported 11 per cent increase in passenger vehicle sales at 18,290 units last month as compared to 16,475 units in October 2017.

"While the industry grew at 2 per cent, Tata Motors saw a robust growth of 11 per cent. We are therefore pleased to sustain positive traction despite strong headwinds such as hike in fuel prices, higher interest rates and increase in insurance premium," Tata Motors President of Passenger Vehicles Business Unit Mayank Pareek said. Similarly, Ford India saw its domestic sales surge over two-fold at 9,044 units in October as against 4,218 units in the year-ago month.